U.S. stocks slumped on Thursday (28/1/2010) local time because the technology sector pressured by weak projections from Qualcomm and increasing economic anxiety after comments from Standard & Poor’s of British banks.
The market also responded warmly to the economic comment in his official speech of U.S. President Barack Obama, where he stressed to put more effort to create jobs and also ordered to reduce spending.
Dow Jones Industrial Average slumped 115.70 points (1.13 percent) to 10,120.46. The Nasdaq composite index slumped 42.41 points (1.91 percent) to 2179.00, while the index of the Standard & Poor’s 500 slid 12.97 points (1.18 percent) to 1084.53.
“The market seemed to react by an S & P statement that British banks are no longer among the best banking systems ‘low risk’,” said a senior adviser to the equity markets Advisors Wells Fargo, Scott Marcouiller.
“We no longer classify the British Empire in the global banking system the most stable and low-risk,” S & P call in a report.
While warning of profit by the technology group Qualcomm pulled down. “Depressed technology sector at all levels of the market and weakness-sector weighed heavily on other key sectors so that they all recorded losses,” analysts at Briefing.com said in a client note.
Market participants respond to a variety of state Obama’s speech, where he focused on the restoration of sustained growth.
Brian Bethune, economist at IHS Global Insight, said Obama “has quickly rearrange priorities to focus on economic and fiscal discipline”.
“This is an important and skilled actions by the President to get back support from voters,” he added. “Restoring economic growth support is necessary precondition for involving the public in some of the deeper, more annoying problem.”
However, David Rosenberg of Gluskin Sheff & Associates commented, “It’s interesting to talk about fiscal honesty and then offer more government stimulus …. Maybe it will affect psychologically and perhaps respond to polls show that most of the fiscal lose public appeal. ”
While the U.S. Labor Department reported that weekly initial claims of unemployment insurance in the week ended January 23 fell to 470,000 from 478,000 the previous week. That’s slightly worse than economists estimated around 450,000.
U.S. Commerce Department said orders for big ticket manufactured goods rose in December, the U.S. 0.3 percent, far below the 2.0 percent economists predicted.
When trading closed, the U.S. Federal Reserve chief Ben Bernanke easily won endorsement for a term of four years, although both had an attack of his role before the 2008 financial crisis.
“It’s clear some uncertainty about the path of monetary policy and limit the damage to the credibility of central banks,” said Ryan Sweet at Moody’s Economy.com.
Qualcomm fell 14.24 percent to 40.48 dollars after the chip maker lowered sales estimates for 2010.
